Foot Locker (NYSE:FL) stock jumped by more than 20% after the company said that it had surpassed analysts’ expectations for both comparable sales and earnings and had raised its forecasts for the entire year.
On sales of $2.17 billion, the New York-based shoe store generated an adjusted profit of $1.27 per share, bringing in a total of $2.17 billion. Both $1.12 billion and $2.1 billion came in lower than what was anticipated by financial analysts. The increase in comparable store sales during the quarter was 0.8%, which was far better than the general prediction of a 6% reduction in sales. This was a result of the robust demand for the product, the company’s efforts to broaden its brand portfolio, and improved access to high-quality inventories.
CEO Mary Dillon remarked, “I’m happy to report that our staff did an excellent job, which contributed to our achieving our financial goals and exceeding them.
Foot Locker’s inventory expands by 29.5%, gross margin declines by 270 basis points
In spite of the challenging conditions in the industry, our consistently expanding customer base remained resilient.” If we leverage the strength of our brand and the incredible expertise of our field employees to our advantage, I believe that there is a lot of room for us to expand into this exciting new area.
The amount of merchandise that Foot Locker has in stock increased by 29.5% from one year and the next. According to the findings of the study, the gross margin for the apparel and shoe industry experienced a decline of 270 basis points between the third and fourth quarters of 2021 as a direct result of increased levels of advertising and inventory. Despite this, the leaders were confident that they would be able to keep this rising cost under control and maintain healthy Christmas sales.
What does the company expect to happen in the fourth quarter?
After a third quarter that was stronger than anticipated, the chief financial officer stated that “There is positive momentum coming out of the quarter.” That “we are raising our outlook for the fourth quarter and for the whole year” is what this signifies. “Even though the macroeconomic climate is still unpredictable, we are certain that we will be able to attain our revised range and still maintain the flexibility necessary to deal with the continual volatility,”
The company now anticipates that comparable sales will decline by 4% to 5%, which is a decrease that is less than what was projected previously (8% to 9%). Full-year sales are currently down 4% to 5%, which is less than what was expected previously (6% to 7%). In the meantime, the company has increased its anticipated adjusted profits per share from $4.25 to $4.45, which is higher than the $4.26 that analysts in the industry believe it ought to be.
In addition, management believes that the gross margin will be between 31.7 and 31.8 percent, which is a significant increase from the prior projection, which was between 31.1 and 31.2 percent. The analysts’ annual predictions, on average, were accurate to within 31.1 percentage points.
